1. CONTENTS
THS INSURANCE ACT, 1938
Arrangement of Sections
PART I
PRELIMINARY
1. Short title, extent and commencement 3.13
2. Definitions 3.13
2A. Interpretation of certain words and expressions 3.18
2B Appointment of Authority of Insurance 3.18
PART II
PROVISIONS APPLICABIJE TO INSURERS
2C. Prohibition of transaction of insurance business by certain persons 3.18
2D. Insurers to be subject to this Act while liabilities Main unsatisfied 3.19
2E. This Act not to apply to certain insurers, ceasing to enter into new
Contracts before commencement of Act 3.19
3. Registration 3.19
3A. Renewal of registration 3.24
3B. Certification of soundness of terms of life insurance business 3.25
4. Minimum limits for annuities and other benefits secured by policies of
life insurance 3.25
5. Restriction on name of insurer 3.26
6. Requirement as to capital 3.27
6A. Requirements as to capital structure and voting rights and maintenance
of registers of beneficial owners of shares 3.27
6AA. Manner of divesting excess shareholding by promoter in certain cases 3.30
6B. Provision for securing compliance with requirements relating to Capital
structure 3.31
6C. Conversion of company limited by shares into company limited by
guarantee 3.32
7. Deposits 3.32
8. Reservation of deposits 3.37
9. Refund of deposit 3.38
10. Separation of accounts and funds 3.38
11 Accounts and balance sheet 3.39
12. Audit 3.40
13 Actuarial report and abstract 3.40
14. Register of policies and register of claims 3.42
15. Submission of returns 3.43
16. Returns by insurers established outside India 3.43
17. Exemption from certain provisions of the Indian Companies Act, 1913 3.44
17A. This Act not to apply to preparation of accounts, etc., for periods prior
to this Act coming into force 3.44
18. Furnishing reports 3.45
19. Abstract of proceedings of general meetings 3.45
20. Custody and inspection of documents and supply of copies 3.45
21. Powers of Authority regarding returns 3.45
22. Powers of Authority to order revaluation 3.46
23. Evidence of documents 3.46
24. [Repealed] 3.46
25. Returns to be published in statutory forms 3.46
26. Alterations in the particulars furnished with application for registration
to be reported 3.47

2. Investment, Loans and Management
27. Investment of assets 3.47
27A. Further provisions regarding investments 3.49
27B. Further provisions regarding investments 3.53
27C. Prohibition for investment of funds outside India 3.57
27D. Manner and conditions of investment 3.57
28. Statement of investments of assets 3.57
28A. Return of investments relating to controlled fund and changes therein 3.59
28B. Returns of investments relating to the assets and changes therein 3.59
29. Prohibition of loans 3.59
30. Liability of directors, etc., for loss due to contravention of sections
27, 27A and 29 3.61
31. Assets of insurer how to be kept 3.61
31A. Provisions relation to managers, etc. 3.61
3IB. Power to restrict payment of excessive remuneration 3.63
32. Limitation on employment of managing agents and on the
remuneration payable to them 3.64
32A. Prohibition of common officers and requirement as to whole time
officers 3.64
32B. Insurance business in rural or social sector 3.65
32C. Obligations of insurer in respect of rural or unorganized sector and
backward classes 3.65
Investigation
33. Power of investigation and inspection by authority 3.65
Appointment of Staff
33A Power to appoint staff 3.68
34. Power of the Authority to issue directions 3.68
Control over Management
34A. Amendment of provisions relating to appointments of managing
directors, etc., to be subject to previous approval of the Authority 3.68
34B. Power of Authority to remove managerial persons from office 3.69
34C. Power of Controller to appoint additional directors 3.70
34D. Sections 34B and 34C to override other laws 3.70
34E. Further powers 3.71
34F. Power of Authority to issue directions regarding re-insurance treaties, etc. 3.71
34G. Power of Authority to order closure of foreign branches 3.72
34H. Search and seizure 3.72
Amalgamation and Transfer of Insurance Business
35. Amalgamation and transfer of insurance business 3.74
36. Sanction of amalgamation and transfer by Authority 3.75
37. Statements required after amalgamation and transfer 3.76
37A. Power of Authority to prepare scheme of amalgamation 3.77
Assignment or Transfer of Policies and Nominations
38. Assignment and transfer of insurance policies 3.80
39. Nomination by policy holder 3.81
Commission and Rebates and Licensing of Agents
40. Prohibition of payment by way of commission or otherwise for
procuring business 3.82

3. 40A. Limitation of expenditure on commission 3.83
40B. Limitation of expenses of management in life insurance business 3.85
4OC. Limitation of expenses of management in general insurance business 3.86
41. Prohibition rebates 3.87
42. Licensing of insurance agents 3.88
42A. Registration of principal agents, chief agents and special agents 3.91
42B. Regulation of employment of principal agents 3.92
42C. Regulation of employment of chief agents and special agents 3.93
42D. Issue of license to intermediary or insurance intermediary 3.95
42E. Commission, brokerage or fee payable to intermediary or insurance
intermediary 3.97
43. Register of insurance agents 3.97
44. Prohibition of cessation of payments of commission 3.97
44A. Power to call far information 3.98
Special Provisions of Law
45. Policy not to be called in question on ground of mis-statement after
two years 3.98
46. Application of the law in force in India to policies issued in India 3.99
47. Payment of money into court 3.99
47A. Claims on small life insurance Policies 3.100
48. Directors of insurers being companies 3.100
48A. Life insurance agents not to be directors of life insurance companies 3.101
48B. Further provision regarding directors 3.101
48C. [Repealed] 3.102
49. Restriction on dividends and bonus 3.102
50. Notice of options available to the assured on the lapsing of a policy 3.103
51. Supply of copies of proposals and medical reports 3.103
52. Prohibition of business on dividing principle 3.103
Management by Administrator
52A. When Administrator for management of insurance business may be
appointed 3.104
52B. Powers and duties of the Administrator 3.104
52BB. Powers of Administrator respecting property liable to attachment
under section 106 3.105
52C. Cancellation of contracts and agreements 3.106
52D. Termination of appointment of Administrator 3.107
52E. Finality of decision appointing Administrator 3.107
52F. Penalty for withholding documents of property from Administrator 3.107
52G. Protection of action taken under sections 52A to 52D 3.107
Acquisition of the Undertakings of Insurers in certain cases
52H. Power of Central Government to acquire undertakings of insurers in
certain cases 3.107
52I. Power of Central Government to make scheme 3.109
52J. Compensation to be given to the acquired insurer 3.110
52K. Constitution of the Tribunal 3.111
52L. Tribunal to have powers of Civil Court 3.111
52M. Procedure of the Tribunal 3.112
52N. Special provisions for the dissolution of acquired insurers 3.112
Winding up
53. Winding up by the court 3.112
53A. Unpaid-up share capital 3.113
54. Voluntary winding up 3.113
55. Valuation of liabilities 3.113
56. Application of surplus assets of life insurance fund in liquidation or
insolvency 3.113

4. 57. Winding up of secondary companies 3.114
58. Scheme for partial winding up of insurance companies 3.115
59. Return of deposits 3.116
60. Notice of policy values 3.116
61. Power of Court to reduce contracts of insurance 3.116
Special Provisions relating to External Companies
62. Power of Central Government to impose reciprocal disabilities on Non-
Indian companies 3.116
63. Particulars to be filled by insurers established outside India 3.117
64. Books to be kept by insurers established outside India 3.117
PART II A
INSURANCE ASSOCIATION OF INDIA, COUNCIL OF THE ASSOCIATION
AND COMMI1lEES THEREOF
64A. Incorporation of the Insurance Association of India 3.118
64B. Entry of names of members in the register 3.118
64C. Councils of the Insurance Association of India 3.118
64D. Authority of members of association to act through agents 3.118
64E. Authorities of the Life Insurance Council and the General Insurance
Council 3.119
64F. Executive Committees of the Life Insurance Council and the General
Insurance Council 3.119
64G. Resignation and filling up of casual vacancies 3.120
64H. Duration and dissolution of Executive Committees 3.120
64-I. Power of Executive Committee of Life Insurance Council to hold
examinations for insurance agents 3.121
64J. Functions of executive committee of Life Insurance Council 3.121
64K. Executive Committee of Life Insurance Council may advise in
controlling expenses 3.121
64L. Functions of the executive committee of General Insurance Council 3.122
64M. Executive Committee of General Insurance Council may advise in
controlling expenses 3.123
64N. Powers of the Executive Committees to act together in certain cases 3.123
64O. [Repealed] 3.123
64P. [Repealed] 3.123
64Q. [Repealed] 3.123
64R. General powers of Life Insurance Council and General Insurance
Council 3.124
64S. Power of Central Government to remove difficulties 3.124
64T. Power to exempt 3.125
PART IIB
TARIFF ADVISORY COMMITTEE AND CONTROL
OF TARIFF RATES
64U. Establishment of Tariff Advisory Committee 3.125
64UA.Composition of the Advisory Committee 3.125
64UB.Power to make rules in respect of matters in this Part 3.125
64UC.Power of the Advisory Committee to regulate rates, advantages, etc. 3.126
64UD.Transitional provisions 3.128
64UE. Power of the Advisory Committee to require information, etc. 3.128
64UF. Assets and liabilities of the General Insurance Council to vest in the
Advisory Committee 3.129
64UG.Contracts, etc., to be effective by or against the Advisory Committee 3.130
64UH.Employees, etc., to continue 3.130
64UI. Duty of person having custody or control of property to deliver such
property to the Advisory Committee 3.132
64UJ. Power of the Advisory Committee to constitute Regional Committees 3.132

5. 64UK.Levy of fees by the Advisory Committee 3.133
64UL. Power to rename difficulties 3.133
64UM. Licensing of surveyors and loss assessors 3.133
PART IIC
SOLVENCY MARGIN, ADVANCE PAYMENT OF PREMIUM AND
RESTRICTIONS ON THE OPENING OF A NEW
PLACE OF BUSINESS
64V. Assets and liabilities how to be valued 3.137
64VA.Sufficiency of assets 3.138
64VB.No risk to be assumed unless premium is received in advance 3.143
64VC.Restrictions on the opening of a new place of business 3.143
PART III
PROVIDENT SOCIETIES
65. Definition of "provident society" 3.144
65A. Prohibition of transaction of insurance business by provident
societies other than public companies or co-operative societies 3.145
66. Restrictions on provident societies 3.145
67. Name 3.145
68. [Repealed] 3.145
69. Dividing business 3.145
70. Registration 3.146
70A. Renewal of registration 3.148
70B. Supplementary information and reports of alterations in particulars
furnished with application for registration 3.148
71. Certain provisions of Part II to apply to provident societies 3.149
72. Working capital 3.149
73. Deposits 3.149
73A. Restriction on name of provident society 3.150
74. Rules 3.150
75. Amendment of rules 3.151
76. Supply of copy of rules 3.151
77. Registered office 3.151
78. Publication of authorised capital to contain also subscribed and paid-
up capital 3.151
79. Registers and books 3.151
80. Revenue account, balance sheet and annual statements 3.152
81. Actuarial report and abstract 3.152
82. Submission of returns to Authority 3.153
83. Actuarial examination of schemes 3.153
84. Separation of accounts and funds 3.154
85. Investment funds 3.155
86. Inspection of books 3.155
87. Inquiry by or on behalf of Authority 3.156
87A. Amalgamation and transfer of insurance business 3.156
88. Winding up by court and voluntary winding up 3.158
89. Reduction of insurance contracts 3.159
90. Appointment of liquidator 3.159
90A. Application of Act to liquidators 3.159
91. Powers of liquidator 3.159
92. Procedure at liquidation 3.160
93. Dissolution of provident society 3.161
94. Nominations and assignments 3.162

6. PART IIIA
INSURANCE CO-OPERATIVE SOCIETIES
94A. Insurance co-operative society to be an insurer 3.162
PART IV
MUTUAL INSURANCE COMPANIES AND CO-OPERATTVE LIFE
INSURANCE SOCIETIES
95. Definitions 3.163
96. Application of Act to Mutual Insurance Companies and Co-operative
Life Insurance Societies 3.164
97. Working capital of Mutual Insurance Companies and Co-operative
Life Insurance Societies 3.164
98. Deposits to be made by Mutual Insurance Companies and Co-operative
Life Insurance Societies 3.164
98A. Prohibition of loans 3.164
99. Transferees and assignees of policies not to become members 3.165
100. Publication of notices and documents of Mutual Insurance Companies
and Co-operative Life Insurance Societies 3.165
101. Supply of documents to members 3.165
PART IVA
RE-INSURANCE
101A. Re-insurance with Indian re-insurers 3.165
101B. Advisory Committee 3.167
101C. Examination of re-insurance treaties 3.167
PART V
MISCELLANEOUS
102. Penalty for default in complying with, or act in contravention of, this Act 3.167
103. Penalty for carrying on insurance business in contravention of
sections 3, 7 and 98 3.169
104. Penalty for false statement in document 3.169
105. Wrongfully obtaining or withholding property 3.169
105A. Offences by companies 3.169
105B. Penalty for failure to comply with section 32B 3.170
105C. Penalty for failure to comply with section 32C 3.170
106. Power of court to order restoration of property of insurer or
compensation in certain cases 3.170
106A. Notice to and hearing of Authority 3.173
107. Previous sanction of Advocate-General for institution of proceedings 3.173
107A. Chairman, etc. to be public servants 3.174
108. Power of court to grant relief 3.174
109. Cognizance of offences 3.174
110. Appeals 3.174
110A. Delegation of powers and duties of Chairperson of the Authority 3.175
110B. Signature of documents 3.175
110C. Power to call for information 3.175
110D. Certain claims for compensation barred 3.175
110E. Sections 3A, 27B, 28B, 33, etc., to apply to general insurance business of
the Life Insurance Corporation of India 3.175
110F. Provisions applicable to State Governments, etc. 3.176
110G. Constitution of Consultative Committee 3.176

7. 110H. Appeals 3.176
111. Service of notices 3.176
112. Declaration of interim bonuses 3.177
113. Acquisition of surrender values by policy 3.177
114. Power of Central Government to make rules 3.178
114A. Power of authority to make regulation 3.179
115. Alteration of forms 3.182
116. Power to exempt from certain requirements 3.182
116A. Summary of returns to be published 3.183
117. Saving of provisions of Indian Companies Act, 1913 3.183
118. Exemptions 3.183
119. Inspection and supply of copies of published prospectus, etc. 3.184
120. Determination of market value of securities deposited under this Act 3.184

8. THE INSURANCE ACT, 19381
[AS AMENDED BY INSURANCE (AMENDMENT) ACT, 2002]
[4 of 1938]
An Act to consolidate and amend the law relating to the business of insurance
Whereas it is expedient to consolidate and amend the law relating to the business of insurance; it is hereby
enacted as follows: -
PART I
Preliminary
Short title, extent and commencement.
1. (1)) This Act may be called Insurance Act, 19382.
(2) It extends to the whole of India.
(3) It shall come into force on such date 3 as the Central Government may, by Notification in the Official
Gazette, appoint in this behalf.
Definitions.
2. In this Act, unless there is anything repugnant in the subject or context, -
3a
(1) “actuary” means an actuary possessing such [qualifications as may be specified by the
regulations made by the Authority];
4
[(1A) “Authority” means the Insurance Regulatory and Development Authority established under sub-
section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999;]
(2) “policy-holder” includes a person to whom the whole of the interest of the policy-holder in the
policy is assigned once and for all, but does not include an assignee thereof whose interest in the
policy is defeasible or is for the time being subject to any condition;
(3) “approved securities,” means-
(i) Government securities and other securities charged on the revenue of the Central
Government or of the Government of a State or guaranteed fully as regards principal and interest by
the Central Government or the Government of any State;
(ii) debentures or other securities for money issued under the authority of any Central
Act or Act of a State Legislature by or on behalf of a port trust or municipal corporation or
city improvement trust in any Presidency-town;
(iii) shares of a corporation established by law and guaranteed fully by the Central
Government or the Government of a State as to the repayment of the principal and the payment of the
divided;
(iv) securities issued or guaranteed fully as regards principal and interest by the Government
of any Part B State and specified as approved securities for the purposes of this Act by the Central
Government by notification in the Official Gazette; and
(4) "Auditor" means a person qualified under the Chartered Accountants Act, 1949 (38 of 1949), to
act as an auditor of companies ;

9. (4A) "banking company" and "company" shall have the meanings respectively assigned in them in
clauses (c) and (d) of sub-section (1) of Section 5 of the Banking Companies Act, 1949 (10 of 1949);
(5) "certified" in relation to any copy or translation of a document required to be furnished by or on
behalf of an insurer or a provident society as defined in Part III means certified by a principal officer of
6Esuch insurer or provident society to be a true copy or a correct translation, as the case may be;
(5A) "chief agent" means a person who, not being a salaried employee of an insurer, in consideration of
any commission-
(i) performs any administrative and organising functions for the insurer, and
(ii) procures life insurance business for the insurer by employing or causing to be employed
insurance agents on behalf of the insurer;
[(5-B) "Controller of Insurance" means the officer appointed by the Central Government under section
2B to exercise all the powers, discharge the functions and performs the duties of the Authority under this
Act or the Life Insurance Corporation Act, 1956 (31 of 1956) or the General Insurance Business
(Nationalisation) Act, 1972 (57 of 1972) or the Insurance Regulatory and Development Authority Act,
1999;]
(6) "Court" means the principal Civil Court of original jurisdiction in a district and includes the
High Court in exercise of its ordinary original civil jurisdiction;
(6A) "fire insurance business" means the business of effecting, otherwise than incidentally to
some other class of insurance business, contracts of insurance against loss by or incidental to fire or other
occurrence customarily included among the risks insured against in fire insurance Policies;
(6B) "general insurance business" means fire, marine or miscellaneous insurance business, whether
carried on singly or in combination with one or more of them;
(7) "Government security" means a Government security as defined in the Public Debt Act, 1944
(18 of 1944);
2
[(7A) “Indian insurance company” means any insurer being a company-
(a) which is formed and registered under the Companies Act, 1956 (1 of 1956);
(b) in which the aggregate holdings of equity shares by a foreign company, either
by itself or through its subsidiary companies or its nominees, do not exceed
twenty-six percent paid-up equity capital of such Indian insurance company;
(c) whose sole purpose is to carry on life insurance business or general insurance
business or re-insurance business.
Explanation- For the purpose of this clause, the expression “foreign
company” shall have the meaning assigned to it under clause (23A) of section 2 of the Income-tax Act, 1961
(43 of 1961);]
(8) "insurance company" means any insurer being a company, association or partnership which may be
wound up under the Indian Companies Act, 1913 (7 of 1913), or to which the Indian Partnership Act, 1932
(9 of 1932), applies;
(8A) “insurance co-operative society” means any insurer being a co-operative society,-
(a) which is registered on or after the commencement of the Insurance (Amendment) Act, 2002,
as a co-operative society under the Co- operative Societies Act, 1912 (2 of 1912) or under any other law for
the time being in force in any State relating to Co-operative Societies or under the Multi-State Co-operative
Societies Act, 1984 (51 or 1984);
(b) having a minimum paid-up capital, (excluding the deposits required to be made under
section 7), of rupees one hundred crores;
(c)in which no body corporate, whether incorporated or not, formed or registered outside India,
either by itself or through its subsidiaries or nominees, at any time, holds more than twenty-six per cent of
the capital of such Co-operative Society;
(d) whose sole purpose is to carry on life insurance business or general insurance business in
India:
(9) "Insurer" means-

10. (a) any individual or unincorporated body of individuals or body corporate incorporated under the law
of any country other than India, carrying on insurance business not being a person specified in sub-clause
(c) of this clause which-
(i) carries on that business in India, or
(ii) has his or its principal place of business or is domiciled in India, or
(iii) with the object of obtaining insurance business, employs a representative, or maintains a place
of business, in India;
(b) any body corporate [not being a person specified in sub-clause (c) of this clause] carrying on the
business of insurance, which is a body corporate incorporated under any law for the time being in
force in India; or stands to any such body corporate in the relation of a subsidiary company within
the meaning of the Indian Companies Act, 1913 (7 of 1913), as defined by sub-section (2) of
section 2 of that Act, and
(c) any person who in India has a standing contract with underwriters who are members of the Society
of Lloyd's whereby such person is authorised within the terms of such contract to issue protection
notes, cover notes, or other documents granting insurance cover to others on behalf of the
underwriters.
but does not include a principal agent' chief agent, special agent' or an insurance agent or a provident
society as defined in Part III;
(10) "insurance agent" means an insurance agent licensed under Sec. 42 who receives agrees to receive
payment by way of commission or other remuneration in consideration of his soliciting or procuring
insurance business including business relating to the continuance, renewal or revival of policies of
insurance;
(10A)"investment company" means a company whose principal business is the
acquisition of shares, stocks debentures or other securities;
(10B) “intermediary or insurance intermediary” shall have the meaning assigned to it in clause (f) of sub-
section 2 of the Insurance Regularoty and Development Authority Act, 1999 (41 of 1999)
(11) “life insurance business" means the business of effecting contracts of insurance upon human life,
including any contract whereby the payment of money is assured on death (except death by accident
only) or the happening of any
(12) "Manager" and "officer" have the meanings assigned to those expressions in clauses
(9) and (11), respectively of Section 2 of the Indian Companies Act, 1913 (7 of
1913);
(13) "Managing agent" means a person, firm or company entitled to the management of the whole affairs of
a company by virtue of an agreement with the company, and under the control and direction of the directors
except to the extent, if any, otherwise provided for in the agreement, and includes any person, firm or
company occupying such position by whatever name called.
Explanation.—If a person occupying the position of managing agent calls himself manager or managing
director, he shall nevertheless be regarded as managing agent for the purposes of Sec. 32 of this Act;
(13A)"marine insurance business" means the business of effecting contracts of insurance
upon vessels of any description, including cargoes, freights and other interests which may be legally
insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and
property of whatever description insured for any transit, by land or water, or both, and whether or not
including warehouse risks or similar risks in addition or as incidental to such transit, and includes any
other risks customarily included among the risks insured against in marine insurance policies;
(13B)"miscellaneous insurance business" means the business of effecting contracts of
insurance which is not principally or wholly of any kind or kinds included in clause (6A), (11) and
(13A);

11. (14) "prescribed" means prescribed by rules made under this Act; and
(15) "principal agent" means a person who, not being a salaried employee of an insurer,
in consideration of any commission,—
(i) performs any administrative and organising functions for the insurer; and
(iii) procures general insurance business whether wholly or in part by
employing or causing to be employed insurance agents on behalf of the
(16) "private company" and "public company" have the meanings respectively assigned
to them in Clauses (13) and (13-A) of Sec. 2 of the Indian Companies Act, 1913 (7 of 1913);
(17) "special agent" means a person who, not being a salaried employee of an insurer, in consideration of
any commission, procures life insurance business for the insurer whether wholly or in part by employing or
causing to be employed insurance agents on behalf of the insurer, but does not include a chief agent.
Interpretation of certain words and expressions
2A. Words and expression used and not defined in this Act but defined in the Life Insurance Corporation
Act, 1956 (31 of 1956), the General Insurance Business (Nationalisation) Act, 1972 (57 or 1972), and
the Insurance Regulatory and Development Authority Act, 1999 shall have the meanings respectively
assigned to them in those Acts.
Appointment of Authority of Insurance.
2B. [(1) If at any time, the Authority is superseded under sub-section (1) of section19 of the Insurance
Regulatory and Development Authority Act, 1999, the Central Government may, by notification in
the Official Gazette, appoint a person to be the Controller of Insurance till such time the Authority is
reconstituted under sub-section (3) of section 19 of that Act
(2) In making any appointment under this section, the Central Government shall have due regard to
the following considerations, namely, whether the person to be appointed has had experience in
industrial, commercial or insurance matter and whether such person has actuarial qualifications.
PART II
PROVISIONS APPLICABLE TO INSURERS
Prohibition of transaction of insurance business by certain persons.
2C. (1) Save as hereinafter provided, no person shall, after the commencement of the
Insurance (Amendment) Act, 1950 (47 of 1950), begin to carry on any class of insurance business
in India and no insurer carrying on any class of insurance business in India shall after the expiry of
one year from such commencement, continue to carry on any such business unless he is-
(a) a public company, or
(b) a society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law
for the time being in force in any State relating to co-operative societies, or
(c) a body corporate incorporated under the law of any country outside India not being of the nature of
a private company:
Provided that the Central Government may, by notification in the official Gazette, exempt from the
operation of this section to such extent for such period and subject to such conditions as it may specify, any
person or insurer for the purpose of carrying on the business of granting superannuation allowances and
annuities of the nature specified in sub-clause (c) of clause (11) of Section 2 or for the purpose of carrying
on any general insurance business:

12. Provided further that in the case of an insurer carrying on any general insurance business no such
notification shall be issued having effect for more than three years at any one time:
Provided also that no insurer other than an Indian insurance company shall begin to carry on any class of
insurance business in India under this Act on or after the commencement of the Insurance Regulatory and
Development Authority Act, 1999.
(2) Every notification issued under subsection (1) shall be laid before Parliament as soon as may be after it is
issued.
(3) Notwithstanding anything contained in sub-section (1), an insurance co-operative society may carry on
any class of insurance business in India under this Act on or after the commencement of the Insurance
(Amendment) Act, 2002
Insurers to be subject to this Act while liabilities remain unsatisfied
2D. Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance
business so long as his liabilities in 3[India] in respect of business of that class remain unsatisfied or
not otherwise provided for.
This Act not to apply to certain insurers ceasing to enter into new contracts before commencement of
Act
2E. The provisions of this Act shall not apply to an insurer as defined in paragraphs (i) or (iii) of sub-clause
(a) of clause (9) of Section 2 in relation to any class of his insurance business whether such insurer hits
ceased, before the commencement of this Act, to enter into any new contracts of that class of business.
Registration
3. (1) No person shall, after commencement of this Act, being to carry on any class of insurance business in
India and no insurer carrying on any class of insurance business in India shall, after the expiry of three
months from the commencement of this Act, continue to carry on any such business, unless he has obtained
from the Authority a certificate of registration for the particular class of insurance business:
Provided that in case of an insurer who was carrying on any class of insurance business in India at the
commencement of this Act, failure to obtain a certificate of registration in accordance with the requirements
of this sub-clause shall not operate to invalidate any contract of insurance entered into by him if before such
date as may be fixed in this behalf by the Central Government by notification in the official Gazette, he has
obtained that certificate:
Provided further that a person or insurer, as the case may be, carrying on any class of insurance business in
India, on or before the commencement of the Insurance Regulatory and Development Authority Act, 1999,
for which no registration certificate was necessary prior to such commencement, may continue to do so for a
period of three months from such commencement or, if he had made an application for such registration
within the said period of three months, till the disposal of such application:
Provided also that any certificate of registration, obtained immediately before the commencement of the
Insurance Regulatory and Development Authority Act, 1999, shall be deemed to have been obtained from
the Authority in accordance with the provisions of this Act
(2) Every application for registration shall be made in such manner as may be determined by the regulations
made by the Authority and shall be accompanied by-
(a) a certified copy of the memorandum and articles of association, where the applicant is a company and
incorporated under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act,
1882 (6 of 1882), or under the Indian Companies Act, 1866 (10 of 1866); or under any Act repealed
thereby,] or, in the case of any other insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause
(9) of section 2, a certified copy of the deed of partnership or of the deed of constitution of the
company, as the case may be, or, in the case of an insurer having his principal place of business or
domicile outside India, the document specified in Clause (a) of Section 63;
(b) the name, address and the occupation, if any, of the directors where insurer is a company incorporated
under the Indian Companies Act, 1913 (7 of 1913), or under the Indian Companies Act, 1882 (6 of

13. 1882), or under the Indian Companies Act, 1866 (10 of 1866), or under any Act repealed thereby, and in
the case of an insurer specified in sub-clause (a) (ii) of clause (9) of section 2 the names and addresses of
the proprietors and of the manager in India, and in any other case the full address of the principal office
of the insurer in India, and the names of the directors and the manager at such office and the name and
address of someone or more persons resident in India, authorised to accept any notice required to be
served on the insurer;
(c) a statement of the class or classes of insurance business done or to be done, and a
statement that the amount required to be deposited by section 7 or section 98 before application for
registration is made has been deposited together with a certificate from the Reserve Bank of India
showing the amount deposited;
(d) where the provisions of section 6 or section 97 apply, a declaration verified by an affidavit made by the
principal officer of the insurer authorised in that behalf that the provisions of those sections as to paid-
up equity capital or working capital have been complied with;
(e) in the case of an insurer having his principal place of business or domicile outside India, a statement
verified by an affidavit made by the principal officer of the insurer setting forth the requirements (if
any) not applicable to nationals of the country in which such insurer is constituted, incorporated or
domiciled which are imposed by the laws or practice of that country upon Indian nationals as a
condition of carrying on insurance business in that country;
(f) a certified copy of the published prospectus, if any, and of the standard policy forms of the insurer and
statements of the assured rates, advantages, terms and conditions to be offered in connection with
insurance policies together with a certificate in connection with life insurance business by an actuary that
such rates, advantages, terms and conditions are workable and sound:
Provided that in the case of marine accident and miscellaneous insurance business other than workmen's
compensation and motor car insurance the above requirements regarding prospectus, forms and
statements shall be complied with only insofar as the prospectus, forms and statements may be available;
and
(g) the receipt showing payment of fee as may be determined by the regulations which shall not exceed fifty
thousand rupees for each class of business as may be specified by the regulations made by the Authority;
(h) such other documents as may be specified by the regulations made by the Authority.
(2A) If, on receipt of an application for registration and after making such inquiry as he deems fit, the
Controller is satisfied that—
(a) the financial condition and the general character of management of the applicant are sound;
(b) the volume of business likely to be available to, and the capital structure and earning prospects of, the
applicant will be adequate;
(c) the interest of the general public will be served if the certificate of registration is granted to the applicant
in respect of the class or classes of insurance business specified in the application; and
(d) the applicant has complied with the provisions of Sections 2-C, 5, 31A and 32 and has fulfilled all the
requirements of this section applicable to him, the Authority may register the applicant as an insurer and
grant him a certificate of registration.
(2AA) The Authority shall give preference to register the applicant and grant him a certificate of registration
if such applicant agrees, in the form and manner as may be specified by the regulations made by the
Authority, to carry on the life insurance business or general insurance business for providing health cover to
individuals or group of individuals.
(2B) Where the Authority refuses registration; he shall record the reasons for such decision and shall furnish
a copy thereof to the applicant.
(2C) Any person aggrieved by the decision of the Authority refusing registration may, within thirty days
from the date on which a copy of the decision is received by him, appeal to the Central Government.

14. (2D) The decision of the Central Government on such appeal shall be final and shall not be questioned
before any Court.
(3) Notwithstanding anything contained in sub-section (2A), in the case of any insurer having his principal
place of business or domicile outside India, the Authority, shall withhold registration or shall cancel a
registration already made, if he is satisfied that in the country in which such insurer has his principal place of
business or domicile Indian nationals are debarred by the law or practice of the country relating to, or
applied to insurance from carrying on the business of insurance, or that any requirement imposed on such
insurer under the provisions of section 62 is not satisfied.
(4) The Authority shall cancel the registration of an insurer either wholly or in so far as it relates to a
particular class of insurance business, as the case may be, -
(a) if the insurer fails to comply with the provisions of section 7 or section 98 as to deposits, or
(aa) if the insurer fails, at any time, to comply the provisions of Sec. 64VA as to the excess of the value
of his assets over the amount of his liabilities; or
(b) if the insurer is in liquidation or is adjudged an insolvent, or
(c) if the business or a class of the business of the insurer has been transferred to any person or has
been transferred to or amalgamated with the business of any other insurer, or
(d) if the whole of the deposit made in respect of insurance business has been returned to the insurer
under Sec. 9, or
(e) if, in the case of an insurer specified in sub-clause (c)of clause (9) of section 2, the standing
contract referred to in that sub-clause is cancelled or is suspended and continues to be suspended
for a period of six months, or
(ee) if the Central Government so directs under sub- section (4) of Sec. 33] and the Authority may cancel
the registration of an insurer-
(f) if the insurer makes default in complying with, or acts in contravention of any requirement of this
Act or of any rule or any regulation or order made or, any direction issued there under, or
(g) if the Authority has reason to believe that any claim upon the insurer arising in India under any policy
of insurance remains unpaid for three months after final judgment in regular course of law, or
(h) if the insurer carries on any business other than insurance business or any prescribed business , or
(i) if the insurer makes a default in complying with any direction issued or order made, as the case may
be, by the Authority under the Insurance Regulatory and Development Authority Act, 1999, or
(j) if the insurer makes a default in complying with, or acts in contravention of, any requirement of the
Companies Act, 1956 (1 of 1956), or the Life Insurance Corporation Act, 1956 (31 of 1956), or the
General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), or the Foreign Exchange
Regulation Act, 1973 (46 of 1973).
(5) When the Authority withholds or cancels any registration under sub-section (3) or clause (a), clause (aa),
clause (e), clause (ee), clause (f), clause (g) or clause (h) of sub-section (4), he shall give notice in writing to
the insurer of his decision, and the decision shall take affect on such date as he may specify in that behalf in
the notice, such date not being less than one month nor more than two months from the date of the receipt of
the notice in the ordinary course of transmission.
(5A) When the Authority cancels any registration under clause (b), clause (c) or clause (d) of sub-section
(4) the cancellation shall take effect on the date on which notice of the order of cancellation is served on the
insurer.
(5B) When a registration is cancelled the insurer shall not, after the cancellation has taken effect, enter into
any new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into
by him before such cancellation takes effect shall, subject to the provisions of sub-section (5D), continue as
if the cancellation had not taken place.
(5C) Where a registration is cancelled under clause (a), clause (aa), clause (e), clause (f), clause (g) or
clause (h) or clause (i) or clause (j) of sub-section (4), the Authority may at his discretion revive the
registration, if the insurer within six months from the date on which the cancellation took effect makes the
deposits required by section 7 or Section 98, or complies with the provisions of Section 64VA as to the
excess of the value of his assets over the amount of his liabilities or has his standing contract restored or has

15. had an application under sub-section (4) of section 3A accepted, or satisfies the Authority that no claim upon
him such as is referred to in clause (g) of sub-section (4) remains unpaid or that he has complied with any
requirement of this Act or the Insurance Regulatory and Development Authority Act, 1999 or of any rule or
any regulation, or order made there under or any direction issued under those Acts that he has ceased to
carry on any business other than insurance business or any prescribed business, as the case may be, and
complies with any directions which may be given to him by the Authority.
(5D) Where lithe registration of an insurance company is cancelled under sub-section (4), the Authority
may, after expiry of six months from the date on which the cancellation took effect, apply to the Court for
an order to wind up the insurance company, or to wind up the affairs of the company in respect of a class of
insurance business, unless the registration of the insurance company has been revived under sub-section
(5C) or an application for winding up the company has been already presented to the Court. The Court may
proceed as if an application under this sub-section were an application under sub-section (2) of section 53, or
sub-section (1) of Sec. 58, as the case may be.
(5E) The Authority may, by order, suspend or cancel any registration in such manner as may be determined
by the regulations made by it:
Provided that no order under this sub-section shall be made unless the person concerned has been given a
reasonable opportunity of being heard.
(6) [***]
(7) The Authority may, on payment of the prescribed fee, not exceeding five rupees, issue a duplicate
certificate of registration to replace a certificate lost, destroyed or mutilated, or in any other case where he is
of opinion that the issue of a duplicate certificate is necessary.
Renewal of registration
3A. (1) An insurer who has been granted a certificate of registration under section 3 shall have the
registration renewed annually for each year after that ending on the 4[31st day of March, after the
commencement of the Insurance Regulatory and Development Authority Act, 1999.
(2) An application for the renewal of a registration for any year shall be made by the insurer to the Authority
before the 31st day of December of the preceding year, and shall be accompanied as provided in sub-section
(3) by evidence of payment of the fee as determined by the regulations made by the Authority which may
vary according to the total gross premium written direct in India, during the year preceding the year in which
the application is required to be made under this section, by the insurer in the class of insurance business to
which the registration relates but shall not—
(i) exceed one-fourth of one per cent. of such premium income or rupees five crores, whichever is less;
(ii) be less, in any case, than five hundred rupees for each class of insurance business:
Provided that in the case of an insurer carrying on solely re-insurance business, the provisions of this
sub-section shall apply with the modification that instead of the total gross premium written direct in India,
the total premiums in respect of facultative re-insurances accepted by him in India shall be-taken into
account.
(3) The fee as determined by the regulations made by the Authority for the renewal of a registration for any
year shall, be paid into the Reserve Bank of India, or where there is no office of that Bank, into the Imperial
Bank of India acting as the agent of that Bank, or into any Government treasury, and the receipt shall be sent
along with the application for renewal of the registration.
(4) If an insurer fails to apply for renewal of registration before the date specified in sub-section (2) the
Authority may, so long as an application to the Court under sub-section (5-D) of section 3 has not been
made, accept an application for renewal of the registration on receipt from the insurer of the fee payable with
the application and such penalty, not exceeding the fee as determined by the regulations made by the
Authority, and payable by him, as the Authority may require:
Provided that an appeal shall lie to the Central Government from an order passed by the Authority imposing

16. a penalty on the insurer
(5) The Authority shall, on fulfillment by the insurer of the requirements of this section, renew the
registration and grant him a certificate of renewal of registration.
Certification of soundness of terms of life insurance business
(3B) If, when considering an application for registration under section 3 or at any other time, it appears to
the Authority that the Assured rates, advantages, terms and conditions offered or to be offered in
connection with life insurance business are in any respect not workable or sound, he may require that a
statement thereof shall be submitted to an actuary appointed by the insurer for the purpose and approved
by the Authority, and may by order in writing further require the insurer to make within such time as
may be specified in the order such modifications in the said rates, advantages, terms, or conditions, as
the case may be, as the said actuary may report to be necessary to enable him to certify that the said
rates, advantages, terms and conditions are workable and sound.
Minimum limits for annuities and other benefits secured by policies of life Insurance
4. (I) No insurer, not being a Co-operative Life Insurance Society to which Part IV of this Act
applies, shall pay or undertake to pay on any policy of life insurance issued after the commencement of
the Insurance (Amendment) Act, 1946 (6 of 1946), an annuity of less than one hundred rupees or a
gross sum of less than one thousand rupees, exclusive of any profit or bonus provided that this shall not
prevent an insurer from converting any policy into a paid-up policy of any value or payment of
surrender value of any amount.
(2) Nothing contained in this section shall apply to any policy of the description known as a group policy,
where the number of persons covered by the policy is not less than fifty or such smaller number as may
be approved by the Authority and a standard form of the policy has bean certified in writing by the
Authority to be a policy of such description or to any policy undertaking to pay a gross sum of more
than five hundred rupees or an annuity of more than fifty rupee, issued-
(a) by an insurer to any person in his permanent employed respect of the life of that person, or
(b) under any scheme, approved by the Authority and complying with such conditions, if any, as
he may think fit to impose, whereby premiums due from persons employed under any employer
are collected by or under the supervision of the employer,
or to any policy issued by a Mutual insurance Company to which Part lV applies and which the Authority
may by order in writing exempt from the provisions of this section, for so long as the company complies
with such conditions, if any, as may be prescribed.
Restriction on name of insurer
5. (l) An insurer shall not be registered by a name identical with that by which an insurer in existence is
already registered, or so nearly resembling that name as to be calculated to deceive except when the insurer
in existence is in the course of being dissolved and signifies his consent to the Authority.
(2) If an insurer, through inadvertence or otherwise is without such consent as aforesaid registered by a name
identical with that by which an insurer already in existence whether previously registered or not is carrying
on business or so nearly resembling it as to be calculated to deceive, the first mentioned insurer shall, if
called upon to do so by the Authority on the application of the second-mentioned insurer, change his name
within a time to be fixed by the Authority:
Provided that nothing in this section shall apply to any insurer carrying on business before the 27th- day of
January, 1937, under the Indian Life Assurance Companies Act, 1912 (6 of 1912):
Provided further that in the application of this section to any insurer who begins to carry on insurance
business after the commencement of the Insurance (Amendment) Act, 1946 (6 of 1946), the references to an
insurer in existence in sub-section (1) and this sub-section shall be construed as including references to a
provident society (as defined in Part III in existence, whether or not the society is in course of being
dissolved.
(3) No insurer other than a provident society as defined in Part III, who begins to carry on insurance business

17. after the commencement of this Act, shall adopt as its name and no such insurer carrying on business before
the commencement of this Act shall continue after the expiry of six months from the commencement thereof
to use as its name any combination of words which includes the word "provident".
Requirements as to capital
6. No insurer carrying on the business of life insurance, general insurance or re-insurance in India on or after
the commencement of the Insurance Regulatory and Development authority Act, 199, shall be registered
unless he has,-
(i) a paid-up equity capital of rupees one hundred crores, in case of a person carrying on the
business of life insurance or general insurance; or
(ii) a paid-up equity capital of rupees two hundred crores, in case of a person carrying on
exclusively the business as a reinsurer :
Provided that in determining the paid-up equity capital specified under clause (i) or clause (ii), the deposit
to be made under section 7 and any preliminary expenses incurred in the formation and registration of the
company shall be excluded:
Provided further that an insurer carrying on business of life insurance, general insurance or re-insurance in
India before the commencement of the Insurance Regulatory and Development Authority Act, 1999 and who
is required to be registered under this Act, shall have a paid-up equity capital in accordance with clause (i)
and clause (ii), as the case may be, within sex months of the commencement of that Act.
Requirements as to capital structure and voting rights and maintenance of registers of beneficial
owners of shares
6A. (1) No public company limited by shares having its registered office in India, shall carry no life
insurance business, unless it satisfies all the following conditions, namely:
(i) that the capital of the company consists only of ordinary shares each of which have a single face
value;
(ii) that, except during any period not exceeding one year allowed by the company for payment of calls
on shares, the paid-up amount is the same for all shares, whether existing or new:
Provided that the conditions specified in this sub-section shall not apply to a public company which has,
before the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), issued any shares other
than ordinary shares each of which has a single face value or any shares paid-up amount whereof is not the
same for all of them for a period of three years from such commencement.
(2) Notwithstanding anything to the contrary contained in any law for the time being in force or in the
memorandum or articles of association but subject to the other provisions contained in this section the voting
right of every shareholder of any public company as aforesaid shall in all cases be strictly proportionate to
the paid-up amount of the shares held by him.
(3) No public company as aforesaid which carries on life insurance business shall, after the commencement
of the Insurance (Amendment) Act, 1950 (47 of 1950), issue any shares other than ordinary shares of the
nature specified in sub-section (l).
(4) A public company as aforesaid which carries on life insurance business-
(a) shall maintain, in addition to the register of members to be maintained under the Indian Companies
Act, 1913 (7 of 1913~3 a register of shares in which shall be entered the name, occupation and
address of the beneficial owner of each share, and shall incorporate therein any change of
beneficial owner declared to it within fourteen days from the receipt of such declaration;
(b) shall not register any transfer of its shares
(i) unless, in addition to compliance being made with the provisions of section 34 of the Indian
Companies Act, 1913 (7 of 1913), the transferee furnishes a declaration in the prescribed form
as to whether he proposes to hold the shares for his own benefit or as a nominee, whether
jointly or severally, on behalf of others and in the latter case giving the name, occupation and
address of the beneficial owner or owners, and the extent of the beneficial interest of each;
(ii) where, after the transfer, the total paid-up holding of the transferee in the shares of the company

18. is likely to exceed five per cent. of its paid-up capital or where the transferee is a banking or an
investment company, is likely to exceed two and a half per cent of such paid-up capital, unless
the previous 2[approval of the Authority] has been obtained to the transfer;
(iii) where, the nominal value of the shares intended to be transferred by any individual, firm,
group, constituents of a group, or body corporate under the same management, jointly or
severally exceeds one per cent of the paid-up equity capital of the insurer, unless the previous
approval of the Authority has been obtained for the transfer.
Explanation.- For the purposes of this sub-clause, the expressions “group” and “same
management” shall have the same meanings respectively assigned to them in the Monopolies
and Restrictive Trade Practices Act, 1969 (54 of 1969);
(5) Every person who has any interest in any share of a company referred to in sub-section (4) which stands
in the name of another person in the register of members of the company, shall, within thirty days from
the commencement of the Insurance (Amendment) Act, 1950 (47 of l950), or from the date on which he
acquires such interest, whichever is later, make a declaration in the prescribed form (which shall be
countersigned by the person in whose name the share is registered) to the company declaring his interest
in such share, and notwithstanding anything contained in any other law or in any contract to the
contrary, a person who fails to make a declaration as aforesaid in respect of any share shall be deemed
to have no right or title whatsoever in that share:
Provided that nothing in this sub-section shall affect the right of a person who has an interest in any such
share to establish in a court his right thereto, if the person, in whose name the share is registered, refuses to
countersign the declaration as required by this sub-section:
Provided further that where any share, belonging to an individual who has made any such declaration as is
referred to in this sub-section, is held by a company in its name in pursuance of any trust or for the purpose
of safe custody or collection or realization of dividend, such individual shall, notwithstanding anything
contained in the Indian Companies Act, 1913 (7 of 1913), or in the memorandum or articles of association of
the company which has issued the share, be deemed to be the holder of the said share for the purpose of
exercising any voting rights under this section to the exclusion of any other person.
(6) If the total paid-up holding of any person in the shares of a company referred to in sub-section (1) on the
commencement of the Insurance (Amendment) Act 1950 (47 of 1950), exceeds two and a half per cent of its
paid-up capital where that person is a banking company or an investment company, or five per cent of its
paid-up capital in any other case, he shall not be entitled to any vote as a shareholder of the company in
respect of such excess holding of shares.
(7) Where the total paid-up holding of any person in the shares of a company referred to sub-section (1) on
the date of the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), exceeds five per cent
of its paid-up capital where that person is a banking company or an investment company, or ten per cent of
its paid-up capital in any other case, he shall dispose of the excess holding of shares within three years from
such commencement or such further period not exceeding two years as may be allowed to him by the
Central Government.
(8) If, after the expiry of three years or of such further period as may be allowed to any person under
sub-section (7), the total paid up holding of any such person has not been reduced to the limits specified in
that sub-section, any shares in excess of the limits specified in that sub-section shall vest in the
Administrator-General of the State in which the registered office of the company concerned is situate and the
Administrator-General shall take such steps as may be necessary for taking charge of any property which has
so vested in him and shall dispose of the said shares and the proceeds thereof in such manner as may be
prescribed.
(9) Subject to the other provisions contained in this section, but notwithstanding anything contained in the
Indian Companies Act, 1913 (7 of 1913), or in the memorandum or articles of association of any such
company as is referred to in sub-section (1), no such company shall refuse to register the transfer of any
shares where the transfer is for the purpose of securing compliance with the provisions of sub-sections (7)
and (8).
(10) The Central Government may, subject to such restrictions as it may think fit to impose, exempt from the
operation of sub-sections (6), (7) and (8) any insurance company, in any case where the total paid-up
holding of such insurance company in the shares of any other insurance company exceeds the limits

19. specified in the said sub-sections, if the other insurance company is or is to be made a subsidiary company of
the insurance company.
(11) The provisions of this section, except those of sub-sections (7), (8) and (9), shall, on and from the
commencement of the Insurance (Amendment) Act, 1968, also apply to insurers carrying on general
insurance business subject to the following notifications, namely:-
(i) that references in sub-sections (1), (3), (5) and (6) to the Insurance (Amendment)
Act, 1950, (47 of 1950), shall be construed as reference to the Insurance (Amendment) Act, 1968; and
(ii) references in sub-section (10) to sub-sections (7) and (8) shall be omitted.
Explanation -For the purposes of this section, the holding of a person in the shares of a company shall be
deemed to include-
(i) the total paid-up holding in such shares held by such person in the name of others; and
(ii) if any shares of the company are held -
(a) by a public limited company, of which such person is a member holding more than ten per
cent. of the paid-up capital, or
(b) by a private limited company, of which such person is a member, or
(c) by a company, of which such person is a managing director, manager, managing agent or in
which he has a controlling interest, or
(d) by a firm in which such person is a partner, or
(e) by such person jointly with others,
such part of the total paid-up holding of the company or firm or of the total joint holding in those
shares, as is proportionate to the contribution made by such person to the paid-up capital of the
company, the paid-up capital of the firm or the joint holding, as the case may be.
Manner of divesting excess shareholding by promoter in certain cases
6AA. (1) No promoter shall at any time hold more than twenty-six per cent or such other percentage as may
be prescribed, of the paid-up equity capital in an Indian insurance company:
Provided that in a case where an Indian insurance company begins the business of life insurance, general
insurance or re-insurance in which the promoters hold more than twenty-six per cent of the paid-up equity
capital or such other excess percentage as may be prescribed, the promoters shall divest in a phased manner
the share capital in excess of the twenty-six per cent of the paid-up equity capital or such excess paid-up
equity capital as may be prescribed, after a period of ten years from the date of the commencement of the
said business by such Indian insurance company or with such period as may be prescribed by the Central
Government.
Explanation.- For the removal of doubts, it is hereby declared that nothing contained in the proviso shall
apply to the promoters being foreign company, referred to in sub-clause (b) of clause (7A) of section 2.
(2) The manner and procedure for divesting the excess share capital under sub-section (1) shall be
specified by the regulations made by the Authority.
Provision for securing compliance with requirements relating to capital structure
6B.(1) For the purpose of enabling any public company carrying on life insurance business to bring its
capital structure into conformity with the requirements of section 6A, an officer appointed in this behalf
by the Central Government may, notwithstanding anything contained in the Indian Companies Act,
1913 (7 of 1913),—
(a) examine any scheme proposed for the purpose aforesaid by the directors of the company:
Provided that—

20. (i) the scheme has been placed before a meeting of the shareholders for their opinion and has
been forwarded to the officer together with the opinion of the shareholders thereon, and
(ii) the scheme does not involve any diminution of the liability of the shareholders in respect of
unpaid-up share capital;
(b) invite objections and suggestions in respect of the scheme so proposed; and
(c) after considering such objections and suggestions to the scheme so proposed,
sanction it with such modifications as he may consider necessary or desirable.
(2) Any shareholder or other person aggrieved by the decision of the officer sanctioning a scheme under
sub-section (1) may, within ninety days of the date of the order sanctioning the scheme, prefer an appeal to
the High Court within whose jurisdiction the registered office of the insurer is situate for the purpose of
modifying or correcting any such scheme for the purpose specified in sub-section (1).
(3) The decision of the High Court where an appeal has been preferred to it under sub-section (2), or of the
officer aforesaid where no such appeal has been preferred, shall be final and binding on all the shareholders
and other persons concerned.
(4) The provisions of this section shall, on and from the commencement of the Insurance (Amendment) Act,
1968, also apply to insurers carrying on general insurance business.
Conversion of company limited by shares into company limited by guarantee
6C. (1) Where a public company limited by shares carrying on insurance business has passed a special
resolution for converting itself into a public company limited by guarantee, it may apply to the Central
Government with a scheme for putting the special resolution into effect, including any provision for the
alteration of the memorandum or articles of association insofar as it may be necessary for this purpose.
(2) If the Central Government, after giving such notice to any person concerned as it thinks fit, is satisfied-
(a) that the scheme makes suitable provision with respect to the repayment, conversion or liquidation
of the paid-up capital of the company,
(b) that the consent of the creditors to the conversion of the company limited by shares into a company
limited by guarantee has been obtained, or that suitable provisions have been made for discharging,
determining or securing the debts or claims of such creditors, and
(c) that the scheme is otherwise reasonable, it may sanction the scheme and thereupon the scheme shall
become binding on the company and on all the persons concerned.
(3) Against the decision of the Central Government, sanctioning a scheme under sub-section (2), any person
aggrieved thereby may, within ninety days of the date of the order sanctioning the scheme, prefer an appeal
to the High Court within whose jurisdiction the registered office of the insurer is situate.
(4) The decision of the High Court where an appeal has been preferred to it under sub-section (3) or of the
Central Government where no such appeal has been preferred, shall be final and binding on all the persons
concerned.
(5) Where a scheme has been sanctioned under this section, the company shall file with the Registrar of
Companies a certified copy of the scheme as sanctioned, and thereupon the provisions of the Indian
Companies Act, 1913 (7 of 1913), relating to companies limited by guarantee shall become applicable to the
company.
Deposits
7. (1) Every insurer shall, in respect of the insurance business carried on by him in India, deposit and
keep deposited with the Reserve Bank of India in one of the offices in India of the Bank for and on
behalf of the Central Government the amount hereafter specified, either in cash or in approved
securities estimated at the market value of the securities on the day of deposit, or partly in cash and
partly in approved securities so estimated:-

21. (a) in the case of life insurance business, a sum equivalent to one per cent of his total gross premium
written direct in India in any financial year commencing after the 31st day of March, 2000, not
exceeding rupees ten crores;
(b) in the case of general insurance business, a sum equivalent to three per cent of his total gross
premium written in India, in any financial year commencing after the 31st day of March, 2000, not
exceeding rupees ten crores;
(c) in the case of re-insurance business, a sum of rupees twenty crores
Provided that, where the business done or to be done is marine insurance only and relates exclusively to
country craft or its cargo or both, the amount to be deposited under this sub-section shall be one hundred
thousand rupees only:
Provided further that in respect of an insurer not having a share capital and carrying on only such insurance
business as in the opinion of the Central Government is not carried on ordinarily by insurers under separate
policies, the Central Government may, by notification under Official Gazette, order that the provisions of
this sub-section shall apply to such insurer with the modification that instead of sum of rupees twenty lakhs
or rupees ten lakhs, as the case may be, the deposit to be made by such insurer shall be such amount, being
not less than one hundred and fifty thousand rupees, as may be specified in the said order.
(2) Where the insurer is an insurer specified in sub-clause (c) of clause (9) of Section 2, he shall be deemed
to have complied with the provisions of this section as to deposits, if in respect of insurance business carried
on by him in India under a standing contract of the nature referred to in sub-clause (c) of clause (9) of
section 2 a deposit of an amount one-and-a-half times that specified in sub-section (1) has been made in the
Reserve Bank of India in one of the offices in India of the Bank for and on behalf of the Central Government
in cash or approved securities estimated at the market value of the securities on the day of deposit by or on
behalf of the underwriters who are members of the Society of Lloyd's with whom he has his standing
contract.
(3) Where the deposit to be made by an insurer not carrying on insurance business in India immediately
before the commencement of the Insurance (Amendment) Act, 1968, a deposit of rupees ten lakhs shall be
made before the application for registration is made, and the provision of clause (ii) of sub-section (1A) shall
apply to such insurer after his registration as they apply to an insurer specified in clause (a) of sub-section
(1).
(4) An insurer shall not be registered for any class of insurance business in addition to the class or classes for
which is already registered until the full deposit required under sub-section (1) has been made.
(5) Where an insurer who intends to become a member of a group, does not carry on all the classes of
insurance business carried on by the other insurers in such group, or, where out of the several insurers who
desire to form themselves into a group, any insurer does not carry on all the classes of insurance business
carried on by the other insurers who desire to form themselves into the group, such insurer may be registered
for that class or those classes of insurance business which is or are carried on by the other insurers of the
group or the proposed group, as the case may be, and where any application for registration is made by any
such insurer, the Authority may, notwithstanding anything contained in sub-section (2A) of Section 3 or
sub-section (4), register such insurer for one or more additional classes of insurance, if the following
conditions are fulfilled, namely:-
(a) the Authority is satisfied that registration for the proposed one or more additional classes of
insurance-business would qualify the insurer to become number of a group;
(b) agreements have been executed by all the insurers in the group or proposed group, as the case may be,
and such agreements in the opinion of the Authority, satisfy the requirements of the Explanation to sub-
section (1B); and
(c) the insurer has, after the commencement of the Insurance (Amendment) Act, 1968, made deposit of a

22. sum not less than the total of all the instalments of deposit which he would have been required to make
after such commencement till the date of his becoming a member of the group, had he been a member of
the group from such commencement.
(6) The Authority shall cancel the registration made in pursuance of the provisions of sub-section (5), if the
insurer referred to therein fails to become, within a period of three months from the date of such registration'
a member of the group or proposed group, as the case may be, and, where such registration has been
cancelled, the provisions of this Act shall apply to the insurer as if he had not been registered for the class or
classes of insurance business in relation to which his registration has been cancelled.
(7) Securities already deposited with the Controller of Currency in compliance with the Indian Life
Assurance Companies Act, 1912 (6 of 1912), shall be transferred by him to the Reserve Bank of India and
shall, to the extent of their market value as at the date of the commencement of this Act, be deemed to be
deposited under this Act, as the instalment or as part of this instalment to be made under the foregoing
provisions of this section before the application for registration is made whether any such application is or is
not in fact made.
(8) A deposit made in cash shall be held by the Reserve Bank of India to the credit of the insurer and shall
except to the extent, if any, to which the cash has been invested in securities under sub-section (9A), be
returnable to the insurer in cash in any case in which under the provisions of this Act a deposit is to be
returned; and any interest accruing due and collected on securities deposited under sub-section (1) or
sub-section (2) shall be paid to the insurer, subject only to deduction of the normal commission chargeable
for the realization of interest.
(9) The insurer may at any time replace any securities deposited by him under this section with the Reserve
Bank of India either by cash or by other approved securities or partly by cash and partly by other approved
securities, provided that such cash, or the value of such other approved securities estimated at the market
rates prevailing at the time of replacement, or such cash together with such value, as the case may be, is not
less than the value of the securities replaced estimated at the market rates prevailing when they were
deposited.
(9A) The Reserve Bank of India shall, if so requested by the insurer,—
(a) sell any securities deposited by him with the Bank under this section and hold the cash realized by
such sale as deposit, or
(b) invest in approved securities specified by the insurer the whole or any part of a deposit held by it in
cash or the whole or any part of cash received by it on the sale of or on the maturing of securities
deposited by the insurer, and hold the securities in which investment is so made as deposit.
and may charge the normal commission on such sale or on such investment.
(9B) where sub-section (9A) applies -
(a) if the cash realized by the sale of or on the maturing of the securities (excluding in the former case
the interest accrued) falls short of the market value of the securities at the date on which they were
deposited with the Bank, the insurer shall make good the deficiency by a further deposit either in
cash or in approved securities estimated at the market value of the securities, on the day on which
they are deposited, or partly in cash and partly in approved securities so estimated, within a period
of two months from the date on which the securities matured or were sold or where the securities
matured or were sold before the 21st day of March, 1940, within a period of four months from the
commencement of the Insurance (Amendment) Act, 1940 (20 of 1940); and unless he does so the
insurer shall be deemed to have failed to comply with the requirements of this section as to
deposits; and
(b) if the cash realized by the sale of or on the maturing of the securities (excluding in the former case
the interest accrued) exceeds the market value of the securities at the date on which they were
deposited with the Bank, the Central Government may, if satisfied that the full amount required to
be deposited under sub-section (1) is in deposit, direct the Reserve Bank to return the excess.
(10) If any part of a deposit made under this section is used in the discharge of any liability of the insurer,
the insurer shall deposit such additional sum in cash or approved securities estimated at the market value of
the securities on the day of deposit, or partly in cash and partly in such securities, as will make up the

23. amount so used. The insurer shall be deemed to have failed to comply with the requirements of sub-section
(1), unless the deficiency is supplied within a period of two months from the date when the deposit or any
part thereof is so used for discharge of liabilities.
Reservation of deposits
8. (1) Any deposit made under section 7 or section 98 shall be deemed to be part of the assets of the insurer
but shall not be susceptible of any assignment or charge; nor shall it be available for the discharge of any
liability of the insurer other than liabilities arising out of policies of insurance issued by the insurer so long
as any such liabilities remain undischarged; nor shall it be liable to attachment in execution of any decree
except a decree obtained by a policy-holder of the insurer in respect of a debt due upon a policy which debt
the policy-holder has failed to realise in any other way.
(2) Where a deposit is made in respect of life insurance business the deposit made in respect thereof shall not
be available for discharge of any liability of the insurer other than liabilities arising out of policies of life
insurance issued by the insurer.
Refund of deposit
9. Where an insurer has ceased to carry on in India all classes of insurance business, and his liabilities in
India in respect of all classes of insurance business have been satisfied or are otherwise provided for, the
court may, on the application of the insurer, order the return to the insurer of the deposit made by him under
this Act.
Separation of accounts and funds
10. (1) Where the insurer carries on business of more than one of the following classes, namely, life
insurance, fire insurance, marine insurance or miscellaneous insurance, he shall keep a separate account of
all receipts and payments in respect of each such class of insurances business and where the insurer carries
on business of miscellaneous insurance whether alone or in conjunction with business of another class, he
shall, unless the Authority waives this requirement in writing, keep a separate account of all receipts and
payments in respect of each of such sub-classes of miscellaneous insurance business as may be prescribed in
this behalf:
Provided that no sub-class of miscellaneous insurance business shall be prescribed under this sub-section if
the insurance business comprised in the sub-clause consist of insurance contracts which are terminable by
the insurer at intervals not exceeding twelve months and under which, if a claim arises, the insurer's liability
to pay benefit ceases within one year of the date on which the claim arose.
(2) Where the insurer carries on the business of life insurance all receipts due in respect of such business,
shall be carried to and shall form a separate tuna to be called the life insurance fund the assets of which shall,
after the expiry of six months from the commencement of the Insurance (Amendment) Act, 1946 (6 of
1946), be kept distinct and separate from all other assets of the insurer and the deposit made by the insurer in
respect of life insurance business shall be deemed to be part of the assets of such fund; and every insurer
shall, within the time limited in sub-section (1) of section 15 in regard to the furnishing of the statements and
accounts referred to in section 11, furnish to the Authority a statement showing in detail such assets as at the
close of every calendar year duly certified by an auditor or by a person qualified to audit under the law of the
insurer's country:
Provided that such statement shall, in the case of an insurer to whom section 11 applies, be set out as a part
of the balance-sheet mentioned in clause (a) of sub-section (1) of that section:
Provided further that an insurer may show in such statement all the assets held in his life department, but at
the same time showing any deductions on account of general reserves and other liabilities of that
department:
Provided also that the Authority may call for a statement similarly certified of such assets as at any other
date specified by him to be furnished within a period of three months from the date with reference to which
the statement is called for
(2A) No insurer carrying on life insurance business shall be entitled to be registered for any class of
insurance business in addition to the class or classes for which he has been already registered unless the

24. Authority is satisfied that the assets of the life insurance fund of the insurer are adequate to meet all his
liabilities on policies of life insurance maturing for payment.
(3) The life insurance fund shall be as absolutely the security of the life policy-holders as though it belonged
to an insurer carrying on no other business than life insurance business and shall not be liable for any
contracts of the insurer for which it would not have been liable had the business of the insurer been only that
of life insurance and shall not be applied directly or indirectly for any purposes other than those of the life
insurance business of the insurer.
Accounts and balance-sheet
11. (1) Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub-clause (b) of clause (9)
of section 2 in respect of all insurance business transacted by him, and in the case of any other insurer in
respect of the insurance business transacted by him in India, shall at the expiration of each financial year
prepare with reference to that year,—
(a) in accordance with regulations contained in part I of the First Schedule, a balance-sheet in the form
set forth in Part II of that Schedule;
(b) in accordance with the regulations contained in part I of the Second Schedule, a profit and loss
account in the forms set forth in Part II of that Schedule, except where the insurer carries on
business of one class only of the following classes, namely, life insurance, fire insurance or marine
insurance and no other business;
(c) in respect of each class or sub-class of insurance business for which he is required under sub-section
(1) of section 10 to keep a separate account of receipts and payments, a revenue account in
accordance with the Regulations, and in the form or forms, set forth in the Third Schedule
applicable to that class or sub-class of insurance business.
(1A) Notwithstanding anything contained in sub-section (1), every insurer, on or after the commencement of
the Insurance Regulatory and Development Authority Act, 1999, in respect of insurance business transacted
by him and in respect of his shareholders’ funds, shall, at the expiration of each financial year, prepare with
reference to that year, a balance-sheet, a profit and loss account, a separate account of receipts and payments,
a revenue account in accordance with the regulations made by the Authority.
(1B) Every insurer shall keep separate accounts relating to funds of shareholders and policy-holders.
(2) Unless the insurer is a company, as defined in clause (2) of sub-section (1) of Section 2 of the Indian
Companies Act, 1913 (7 of 1913), the accounts and statements referred to in sub-section (1) shall be signed
by the insurer, or in the case of a company by the chairman, if any, and two directors and the principal
officer of the company, or in the case of a firm by two partners of the firm, and shall be accompanied by a
statement containing the names, descriptions and occupations of, and the directorships held by, the persons
in charge of the management of business during the period to which such accounts and statements refer and
by a report on the affairs of the business during that period.
(3) Where an insurer carrying on the business of insurance at the commencement of this Act has prepared
the balance-sheet and accounts required by the Indian Life Assurance Companies Act, 1912 (6 of 1912), or
has based his accounts upon the financial and not the calendar year, the provisions of this section shall, if the
Central Government so directs in any case, apply until the 31st day of December, 1939, as if in sub-section
(1) references to the calendar year were references to the financial year.
Audit
12. The balance-sheet, profit and loss account, revenue account and profit and loss appropriation account of
every insurer, in the case of an insurer specified in sub-clause (a)(ii) or sub-clause (b) of clause (9) of section
2 in respect of all insurance business transacted by him, and in the case of any other insurer in respect of the
insurance business transacted by him in India, shall, unless they are subject to audit under the Indian
Companies Act, 1913 (7 of 1913), be audited annually by an auditor, and the auditor shall in the audit of all
such accounts have the powers of, exercise the functions vested in, and discharge the duties and be subject to
the liabilities and penalties imposed on, auditors of companies by section 145 of the Indian Companies Act,
1913.